SAP and sustainability: About the EU taxonomy and why sustainability does not stop at SAP systems

Sustainability. This term has been on everyone’s lips for a few years now. And it is now spreading far and wide. While some make sure to save plastic, others avoid flights. And still others use green electricity. A ball has been set rolling – and this development is not stopping at companies either. The order of the day is therefore: act sustainably – even as a company. So it’s no wonder that the EU has also drawn up regulations. One of these is the EU Taxonomy Regulation, which is already changing the way many companies do business and their annual reports, or will do so in the near future. This means that modern ERP systems such as SAP are needed to take this development into account. The blog post reveals exactly what the EU taxonomy is all about and how SAP is taking sustainability into account.

EU-wide, generally valid classification instrument

Our planet is on its last legs in many respects – and there is no plan(eten) B. The EU has therefore drawn up environmental targets. The European Green Deal, for example, aims to make Europe climate-neutral by 2050. For this to succeed, it is not only essential to rethink and tackle the issue, but comprehensive efforts are also needed in the public sector and in companies. However, the question is: how can the whole thing be measured? And this is where the EU Taxonomy Regulation comes into play. This EU-wide, generally applicable classification tool for sustainable companies and financial products is intended to provide a clear definition of green, sustainable and environmentally friendly activities. And thus also counteract “greenwashing”. The EU Taxonomy Regulation therefore has a direct influence on the annual report and is not only intended to promote the topic of sustainability throughout the EU, but also has a global impact on parameters such as risk management and investment decisions. The assessment standard is based on six environmental targets:

  • Climate protection (focus: CO2 reduction)
  • Climate change adaptation
  • Sustainable use and protection of water and marine resources
  • Transition to a circular economy
  • Prevention and reduction of environmental pollution
  • Protection and restoration of biodiversity and ecosystems

There are also minimum social criteria, such as human rights, and the DNSH principle. This abbreviation stands for “Do no significant harm”. This means that the objectives must not have a negative impact on each other. In summary, this means that according to the EU taxonomy, an economic activity is considered sustainable if it makes a substantial contribution to the achievement of one or more environmental objectives and does not significantly harm any other objective. In addition, it must be carried out in compliance with the minimum level of protection (i.e. the minimum social criteria) and meet technical assessment criteria.

Classification into relevant & compliant activities

An accurate approach is important here - because all of this is essential for reporting and relates to turnover as well as OPEX and CAPEX. Such a classification in terms of sustainability could look like this:

The EU has drawn up a table of activities that fall under the EU taxonomy. As a company, you first need to check whether your own activities are included here.
If they are relevant, the second step is to check whether the criteria set by the EU are met. In other words, whether the activities are compliant ("aligned"). It is then also important to check that no other objective is being violated ("DNSH"). Finally, social sustainability criteria, such as human rights, must also be taken into account.

SAP and sustainability: solutions for sustainability criteria

Sustainable or not - that is the question. And proper documentation is therefore essential. And that brings us to modern ERP systems such as SAP. They always reflect all value-adding activities - whether purchasing, sales or production - in the same way using postings so that the figures are always up-to-date. The highlight: the account assignment elements or postings can also be enriched with the necessary reporting criteria with regard to sustainability, which are important for the EU taxonomy. This means that the activity code and environmental objective associated with each activity are derived and whether they are compliant. This provides the necessary evaluation criteria.

The account assignment elements or postings can be enriched with the necessary reporting criteria that are required for the EU taxonomy. We can therefore integrate this directly into the posting logic - that's a big advantage.

Many other modern solutions

The EU taxonomy is an essential framework condition, particularly with regard to business reporting. However, as already mentioned, it is only one aspect of many. The topic of sustainability goes much further and influences numerous other areas - for example, there are now SAP solutions that help to calculate footprints, consider environmental aspects such as recyclability in product design, or take into account the Supply Chain Sustainability Act.

Approaching the topic holistically

All in all, it can be said that Sustainability is a very broad topic. And therefore also one that can quickly become confusing and extremely complex for companies. We at scc are aware of this and therefore take a holistic approach to the topic. Various tools and solutions help to generate the necessary data with as little manual effort as possible. However, the first step also involves structuring the large field into sub-areas in terms of requirements. We offer our "Sustainability Discovery Workshops" to provide companies with optimal support in this regard.

It is important for companies to structure the large area of sustainability in order to be able to focus on the individual areas. This is why scc takes a holistic approach to this topic - with a variety of tools and solutions. The right priorities are developed with our "Sustainability Discovery Workshops".
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